Aurelia Butler

WASHINGTON (Reuters) -The battle to raise the U.S. debt ceiling rekindled debate in Congress over funding for Ukraine, as House of Representatives Speaker Kevin McCarthy said on Tuesday he had no immediate plans to take up legislation to boost defense spending beyond what was in last week’s deal.McCarthy’s comments could signal a tougher road through Congress when President Joe Biden next asks for additional funds for Ukraine. The House and Senate last approved aid for the Kyiv government – $48 billion – in December, before Republicans took control of the House.That money is expected to last at least through Sept. 30, the end of the current fiscal year. Lawmakers said Biden is expected to request more funds by August or September.The debt ceiling agreement, which Biden signed into law on Saturday, capped national security spending in the year ending Sept. 30, 2024 at $886 billion, the amount Biden requested but below what congressional defense hawks wanted.After some Republicans threatened to vote against the deal over the tightened defense spending, the Senate’s Democratic and Republican leaders promised that the caps would not prevent the chamber from passing supplemental spending legislation to provide more money for Ukraine and the Department of Defense.However, McCarthy, who negotiated the agreement with Biden, said he would not automatically allow a vote on supplemental spending legislation in the Republican-led House.”It doesn’t matter if it’s Ukraine or anything else. The idea that someone wants to go do a supplemental after we just came to an agreement is trying to blow the agreement,” McCarthy told reporters at the Capitol.SOME SENATE REPUBLICANS DISAGREEHowever, some Republican senators still said they believed a supplemental spending bill would be necessary. “I strongly believe we are going to need a supplemental for defense,” Senator Susan Collins, the top Republican on the Senate Appropriations Committee, told reporters.McCarthy said he supported Ukraine and helping Ukraine to defeat the Russian invasion but would want more information before moving ahead.”I’m not giving money for the sake of giving money. I want to see what is the purpose, what is the outcome you want to achieve and then show me the plan to see if I think that plan actually can work?” he said.House Republicans want any money for Ukraine – or other priorities – to move ahead via “regular order,” with Congress debating and passing the 12 appropriations bills lawmakers will work on this summer to fund government programs in the fiscal year beginning Oct. 1.Overall, the House and Senate have approved more than $113 billion of military assistance and other aid for Ukraine since Russia invaded in February 2022. The four tranches of assistance all passed with strong support from both Republicans and Democrats, although all were approved while Democrats controlled both the Senate and House. More

Some further tightening may still be required to bring inflation to heel but that would depend on how the economy and inflation evolve, said Reserve Bank of Australia (RBA)’s Lowe said at the Morgan Stanley (NYSE:MS) Australia Summit in Sydney.The RBA has projected headline inflation – which is at about 7% now – to return to the top of the bank’s target of 2%-3% by mid-2025, a slower path than many other economies as Lowe wants to preserve strong gains in the labour market.”It is too early to declare victory in the battle against inflation,” said Lowe, conceding that the narrow path the central bank was trying to achieve – without crashing the economy into a recession – was likely to be bumpy.”I want to make it clear, though, that the desire to preserve the gains in the labour market does not mean that the Board will tolerate higher inflation persisting.”Price pressures have led the RBA to raise its cash rate by 400 basis points since last May, the most aggressive tightening campaign in modern history.Inflation has peaked and the April CPI reading of 6.8% – which came in higher than expected – has not changed the bank’s assessment that inflation is trending lower, according to Lowe.He also elaborated on four areas that the Board would be paying close attention to in upcoming policy decisions – global economy, household spending, growth in unit labour costs and inflation expectations.Services price inflation in the country remained high, with rents rising quickly and electricity prices set to increase further, unit labour costs are rising briskly without a pickup in productivity, and medium-term inflation expectations could start to shift higher, said Lowe.”It is in Australia’s interest that we get on top of inflation and we do so before too long. The Board will do what is necessary to achieve that.” More

HONG KONG (Reuters) -U.S. venture capital giant Sequoia plans to split off its Chinese and Indian/Southeast Asian businesses into two independent firms, it said on Tuesday, as it tries to better navigate economic and geopolitical challenges. The split, which will see the two new firms adopt their own brands, will occur by March 31, 2024, Sequoia said in a statement signed by managing partner Roelof Botha, China head Neil Shen, and India and Southeast Asia head Shailendra Singh. The firm’s U.S. and European venture business will remain known as Sequoia Capital.Economic challenges and geopolitical tensions have made fundraising and investment difficult, and eaten into global venture funds’ returns.”It has become increasingly complex to run a decentralized global investment business,” Sequoia said in the statement. “This has made using centralized back-office functions more of a hindrance than an advantage.”Investment in China by global players in particular has slowed as the world’s second-largest economy battles to emerge from COVID-19 pandemic curbs and after it tightened regulatory oversight that stymied growth in the technology and internet sectors.Sequoia China will retain its current Chinese name and adopt the name HongShan in English, while Sequoia India and Southeast Asia will become Peak XV Partners, the firm said.Sequoia started to invest in local companies in China, India and Southeast Asia more than 15 years ago, according to the statement.Sequoia China, founded and led by former entrepreneur and investment banker Shen, has invested in more than 1,200 companies in sectors ranging from technology to healthcare. It manages about $56 billion in assets and raised $9 billion in four funds in 2022.Its trophy assets include social media giant Bytedance, delivery and local services firm Meituan and online fashion retailer PDD Holdings Inc.A spokesperson for Sequoia Capital said business considerations were the primary reason for the separation.’VERY RATIONAL CHOICE’ U.S. security concerns and tit-for-tat trade restrictions, have recently kept many dollar investors on the sidelines in China. The Biden administration has been working on new rules restricting U.S. investments in China, and Sequoia has hired a national security firm to advise it on how to mitigate such risks, sources told Reuters.”This separation should help each regional entity to have more flexibility to pursue investment opportunities independently, better cope with the evolving geopolitical environment and local compliance requirements, and also address the portfolio conflicts across entities,” said Weiheng Chen, head of Greater China practice at law firm Wilson Sonsini. According to Steven Yu, a Shanghai-based partner at Chinese law firm Global Law Office, many dollar and yuan investors have concerns about investing in Sequoia China under the global brand amid China-U.S. tensions.The separation will dispel many yuan investors’ concerns, which could make HongShan more attractive to them, Yu said. “It is an inevitable and very rational choice.”China-focused venture capital fundraising is heading for its weakest first-half year in at least eight years, Reuters reported last week, citing Preqin data.Bytedance, in which Sequoia China and U.S. teams were joint investors, has been caught in the China-U.S. crossfire for its ownership of global social media platform TikTok since the Trump era and is still facing close scrutiny in the U.S. Shen will remain on the board of Bytedance following the separation. “As each entity’s portfolio has expanded to include companies that are becoming global leaders, we’ve seen growing market confusion due to the shared Sequoia brand as well as portfolio conflicts across entities,” Sequoia said in the statement. Sequoia India is the country’s biggest venture capital firm, managing $9 billion in assets. Singh and his team raised a $2.5 billion India and Southeast Asia fund last year, their biggest yet.Some of their biggest investments include food delivery giant Zomato, software firm Freshworks and troubled hotelier Oyo.The business has grappled with a series of portfolio governance scandals in India since last year.($1 = 7.1215 Chinese yuan renminbi) More

BUENOS AIRES (Reuters) – Argentine budget airline Flybondi said on Tuesday it would ground two planes due to an inability to access U.S. dollars needed to pay for services outside the country, underlining the strict capital controls facing many companies.Flight cancellations and delays will affect 5,500 passengers between Wednesday and Friday, according to a statement from the airline. Flybondi said it had been unable to obtain official authorization to make foreign leasing payments for its fleet, in addition to other specialized services it must acquire outside the South American country.The capital controls stem from the government’s policy of guarding the central bank’s scarce foreign currency reserves, needed to pay down debt but also used to finance dollar-denominated imports.Flybondi has 12 Boeing (NYSE:BA) 737 planes in its fleet and its 20 daily domestic routes make up about a fifth of the domestic industry.Its decision to ground planes underscores the difficulty accessing hard currency facing even big companies, a problem made worse by a historic drought that sharply reduced farm exports, which normally fill central bank coffers with dollars.The recent drought came amid an already prolonged economic slump fueled by triple-digit inflation and the steady deterioration of the country’s peso currency.Flybondi’s announcement follows other efforts by the government to preserve central bank reserves, affecting the energy sector and provincial governments.The country’s top trade official stressed the need to prioritize how it marshals reserves, while also appearing to question the amount Flybondi had sought as excessive.”Today the government administers reserves looking after priorities and needs of various sectors,” Trade Secretary Matias Tombolini wrote on Twitter.He noted that Flybondi said it needed access to $11 million for leasing and other services “but the evolution of its cost payments showed an average of $150,000 per plane per month.”Tombolini added that the airline agreed to request authorization for $6.2 million for two months, and that its request would be analyzed.Flybondi declined to comment beyond its earlier statement. More

In a rare admission for the world’s largest carmaker and Japan’s most powerful company, Toyota’s chief executive Koji Sato admitted last week that there were “limitations” to its ability to provide support to its truck subsidiary Hino Motors.On the same stage in Tokyo, Martin Daum, the head of Daimler Truck, issued a similarly grim warning that the merger of the two groups’ truck units in Japan was essential for survival in the race for carbon neutrality. “We have to change a system that was successful over the last 120 years within the next 10 years to a completely new system,” Daum said, noting that the effort would require new infrastructure for energy generation and distribution. “We have to do it to save the planet. This is so massive that you can’t do it alone.”Consolidation within the country’s crowded automotive industry was long overdue. But Toyota’s decision to offload its commercial truck unit — scarred by repeated emissions and fuel efficiency scandals — comes as the company faces pressure from shareholders to improve its governance structure and climate policy.Two of the largest US public pension systems — the California Public Employees’ Retirement System and the Office of the New York City Comptroller — have voted against the re-election of Akio Toyoda at its upcoming annual meeting after proxy adviser Glass Lewis criticised the Toyota chair for presiding over a board that was not sufficiently independent. Along with Institutional Shareholder Services and the Church of England Pensions Board, the US pension plans also backed a shareholder proposal seeking more disclosure on the company’s climate lobbying efforts. Toyota said it would actively engage with shareholders and consider the most appropriate board structure.The carmaker has repeatedly been criticised by investors for not being aggressive enough with rolling out electric vehicles and appearing to be overly protective of its hybrid technology. The criticism is not new, but at the heart of the issue is a climate change challenge that goes well beyond the predicament facing Toyota.One of the biggest risks for businesses is the competitive disadvantage they would face if, despite good intentions, global investors judge that Japan, with its heavy reliance on coal, natural gas and oil, is turning to an environmental policy that is out of step with the rest of the world. The country has pushed for an energy transition and climate strategy in Asia that does not sacrifice economic growth, saying the situation for developing countries in the region was “unique” compared with advanced economies in the US and Europe. Its push for ammonia as a tool to reduce emissions also recently faced a backlash from other G7 members since it risked prolonging existing fossil fuel infrastructure. 

In the corporate world, Panasonic, Hitachi and others have campaigned for a new environmental metric — dubbed “avoided emissions” or Scope 4 — that would quantify contributions companies make towards reducing carbon emissions in the broader society by offering energy-saving products and services. In Panasonic’s case, the company argues that its contributions to lowering emissions by selling car batteries for use in Tesla’s electric vehicles should be recognised, even if producing the batteries is carbon intensive. While the concept has won backing from asset managers such as London-based Schroders,critics have warned that creating a new climate measure would distract companies from actually reducing their carbon footprints in their own operations and supply chains.Kim Schumacher, associate professor in sustainable finance at Kyushu University, says Japan’s push for ammonia as well as avoided emissions is fundamentally driven by the need to make Japanese products more competitive, even if they are produced with a bigger carbon footprint than those made in other countries with more decarbonised energy sectors.At present, companies with manufacturing sites in the country, such as Sony, are struggling to meet demands from Apple and other global clients to reduce the carbon footprint of their domestic supply chains.The climate challenge also comes at a particularly sensitive geopolitical moment. Global semiconductor companies, including Micron, Samsung Electronics and Taiwan Semiconductor Manufacturing Company, are planning to increase manufacturing and research in Japan in response to the risks posed by the technology war between the US and China.But if Japan wants to position itself as a reliable and supply chain-friendly partner of the west, it will only create harm if its climate efforts, regardless of their logic, are seen as going against the global tide. [email protected] More

LONDON (Reuters) – The global sovereign debt roundtable will meet on Friday to focus on technical talks aimed at discussing issues such as arrears and comparability of treatment for countries in default, two sources with direct knowledge of the matter told Reuters. This would be the third encounter for the group that includes representatives of the International Monetary Fund (IMF), the World Bank and current Group of 20 (G20) major economies leader India after one in Bengaluru in February followed by an April meeting in Washington, during the IMF-World Bank spring meetings.The initiative was formally launched late last year amid continued delays in securing debt treatment for countries in default such as Zambia, Ghana and Sri Lanka, that are in talks with a wide variety of stakeholders like the Paris Club, India and China – the world’s largest bilateral creditor.As part of the technical talks, the latest meeting will focus on cut-off dates, one of the sources said, as consensus is needed on the starting date from which new loans are excluded from a restructuring.The sources, who did not specify who would participate in the Friday meeting, declined to be named because the talks are private.The IMF and World Bank did not respond to requests for comment. Bilateral creditors representatives participated in previous meetings, as well as government officials from countries that have requested debt treatments under the G20 Common Framework. Some private sector creditors have also been part of the talks in both Bengaluru and Washington. More